Lower Nazareth spends big in Selvaggio eviction case

The township has paid $169,000 in legal battle with Selvaggio Enterprises.

Lower Nazareth Township is in court as it tries to turn the former Selvaggio… (HARRY FISHER, THE MORNING…)

January 08, 2013|By JD Malone, Of The Morning Call

Some things are worth the price.

For Lower Nazareth Township, $1.3 million for a 32,000-square-foot building and 2.8 acres of land, plus $169,000 in legal fees to evict a host of tenants is a bargain. Timm Tenges, township manager, said as long as Lower Nazareth prevails in its battle with Selvaggio Enterprises over the company's former headquarters, the cost will be justified.

A year ago the township bought the Selvaggio property, on what was then named Selvaggio Drive, at sheriff's sale, and planned to make the office and warehouse complex the new municipal building.

The road is now called Municipal Drive. But Selvaggio Enterprises and a collection of affiliated companies owned by Stephen and Teresa Selvaggio, declined to move out.

Stanley Margle III, Selvaggio's attorney, said the companies signed leases for the space and that the township inherited the leases. The township disputes that idea and sued in February to evict everyone in the building.

The township also sued to collect its legal expenses from Selvaggio. Those expenses, from February through October — the last full accounting — come to $169,000, according to invoices provided by Margle. Tenges did not dispute the figures.

Gary Asteak, Lower Nazareth's solicitor, has billed for about 83 hours at $175 an hour, according to invoices Margle provided. In March the township brought in the Philadelphia firm Fellheimer & Eichen LLP, whose attorneys, up to six of which worked on the case, charge more than double Asteak's fee.

The township pays from $300 to $525 an hour for the firm's attorneys. Tenges said it's money well spent.

"It is a staggering number," Tenges said of the legal bills.

Tenges said even with Fellheimer & Eichen's tab blowing up the township's budget for legal services, the price of a new municipal building would dwarf what Lower Nazareth paid for the Selvaggio property.

"The costs would far exceed that," Tenges said of the purchase price plus legal bills. "It is still a good purchase for our constituents."

According to county tax records, the property is valued at about $1 million. Records show Selvaggio paid $650,000 for the land in 1990.

Margle said the legal bill is outrageous and can't believe the township would spend six figures to expel a viable business. Margle said his own bill for legal services in the case is about $30,000.

Selvaggio, once a prosperous developer and contractor, runs several companies from the complex, including a plumbing contractor, an excavating company and other enterprises. Selvaggio has battled creditors and financial collapse due to mounting debt and the recent recession.

The building in question was foreclosed on by Wells Fargo in 2011. Selvaggio was dogged by other banks he and his wife owed money and by suppliers who demanded payment for goods and services. Selvaggio flirted for bankruptcy in 2011. Margle claims Selvaggio's companies continue to operate and pay their bills.

Tenges said Selvaggio pays rent to the township as agreed in the leases Selvaggio claims the township inherited when it bought the complex. Tenges said the rent more or less covers the township's legal fees.

The case is set for trial later this month in Northampton County Court.

Beyond collecting rent to cover the legal fees—– Tenges said the township has placed the rent in escrow since the entire deal is in tied up in court — the township expects to prevail and extract whatever money it can from Selvaggio.

"As far as I am concerned, we are going to try to get every bit of that back from [Selvaggio]," Robert Kucsan, vice chairman of the Board of Supervisors, said.

Kucsan admitted he didn't know the legal bills had piled so high, but he blamed Selvaggio for the burden. Tenges said Fellheimer & Eichen came aboard after the township realized Selvaggio was going to fight.

"We just thought that it may be more effective," Tenges said, adding that Asteak remains co-counsel on the case. "It is unfortunate that Mr. Selvaggio took this path."